Italy Seeks to Increase Public Debt Held Domestically – Economy Minister, According to Reuters

By Giuseppe Fonte

ROME – Italy aims to increase domestic investment in government debt, as stated by Economy Minister Giancarlo Giorgetti. This strategy is part of the country’s effort to mitigate the effects of future global crises.

Italy’s significant public debt, the second highest in the euro zone after Greece when measured against gross domestic product, is critical for the stability of the euro zone.

During a speech to bankers in Rome, Giorgetti highlighted the recent success of bond issues aimed at Italian retail investors as a "very important sign" of confidence between the government and its citizens. He emphasized that the objective is to concentrate the majority of public debt within Italy.

So far this year, Italy has raised approximately 45 billion euros through bond offerings designed specifically for retail investors, namely ‘BTP Valore’ and ‘BTP Italia.’

Data from the Bank of Italy revealed that as of July, foreign investors held 27.4% of the country’s total public debt of 2.84 trillion euros.

To further enhance domestic investment, the 2024 budget includes a provision to partially exempt income from government bonds from the ISEE, a wealth metric that dictates access to welfare benefits. The proposal allows taxpayers to deduct up to 50,000 euros in sovereign bonds and investment products backed by the state for small savers.

This measure has drawn criticism from opposition parties and academics, who argue it undermines the focus of welfare programs on the economically disadvantaged. Furthermore, an internal government document indicated that the new measure would increase annual spending by 44 million euros starting in 2024, as rising eligibility for state subsidies is expected.

Giorgetti emphasized the importance of restoring "the confidence of savers and markets in Italy," especially in the face of a challenging economic situation characterized by the risk of a potential global recession.

Last month, the government adjusted its budget deficit targets for the 2023-2025 period, raising concerns in the market and potentially leading to tensions with the European Commission.